The Wood Pellet Association of Canada (WPAC) Conference offered attendees updates on market and policy updates for the wood pellet sector.
The panel discussion, Market and Policy Update: Navigating Regulatory Change, was moderated by Vaughan Bassett, President of WPAC and Senior Vice President of Biomass Sales and Logistics at Drax. The panellists included FutureMetrics President William Strauss; Fiona Matthews, Bioenergy Director at Hawkins Wright; Marta Imarisio, Senior Reporter at Argus Biomass; and Pierre-Jonathan Teasdale, Director of Trade and International Affairs Division, Canadian Forest Service (CFS).
Pierre-Jonathan Teasdale kicked off the session explaining the role of the CFS and discussing the policy environment for biomass, specifically wood pellets, as it relates to the role of the federal government. The CFS is the international and domestic voice for the forest sector in Canada and provides advice, expertise and policy support from its office in Ottawa and six regional offices across the country.
“For us, the forest sector is a key pillar of the Canadian economy, supporting good jobs, supplying low-carbon products, and the biomass and wood pellets sector is certainly part of that,” Teasdale told the crowd.
The CFS supports the forest sector through grants and contributions through a range of programs. Currently, it has five competitiveness programs delivering a range of support to the forest sector in the areas of innovation, market diversification and Indigenous engagement. The CFS is also helping the industry prepare for meeting the EU requirements for its Regulation on Deforestation-free Products (EUDR), which were delayed by one year this past September.
“We provided some support to WPAC, for example, to develop a pilot traceability platform. I think that the sector is well ready to meet the EUDR requirements, which is good news,” Teasdale said. “Internationally, we are also supporting Canadian participation in ISO standards for solid biofuels exports. This includes standards for testing wood pellets, as well as for their safe storage.”
To help CFS provide support and analysis, it conducts yearly surveys on the sector, collecting information and data on wood pellet mills, bioheat used in commercial and institutional settings, and the industrial use of wood for energy. The CFS is in the process of collecting 2024 data and should be able to release this information in a webinar this November, as well as publish it on the CFS website.
Internationally, one trend that the CFS has identified in recent years is the need for wood pellets to be sourced from legal and sustainable sources, which creates a pressure of transparency and traceability, Teasdale told the crowd.
“Although Canada is recognized as a leader in sustainable forest management, it still creates uncertainty for producers and could lead to increased costs to export in those markets,” he said. “Given that EU is the third [largest] market in importance for the wood pellet sector, this is a top priority for us.”
The CFS is working with the provinces, territories, and industry associations, such as WPAC, while engaging with European officials to talk about Canada’s strong, sustainable forest management practices, legal framework, and low risk of deforestation.
“We continue to monitor and report on the state of Canada’s risk, which provides reassurances to most markets that Canada is still a great trading partner,” Teasdale said.
Teasdale also touched on the recently announced $500 million in funding for the forest products sector, which will focus on innovation, diversification, and targeted support for Indigenous-led forestry biomass development.
“As part of that, our team will launch a diversification program that targets offshore markets. There will definitely be support provided to the pellets industry on that [ie. the pellet sector will be among the sectors eligible to apply for support], and we’re actively working on measures to be announced promptly in the new year,” he said.
Carbon transition
FutureMetrics president Bill Strauss discussed the need to transition out of a carbon-based energy economy, and the role that wood pellets and biomass can play.
“Now, for many, many, many years in a row, we’ve hit new records for carbon dioxide concentrations the atmosphere… the Earth is not able to manage this kind of rapid increase in carbon dioxide emissions,” he said.
Strauss said that a strategic plan is needed to combat the rising carbon emissions and reducing reliance on fossil fuels. He showed the U.K. ’s energy mix as an example that can be emulated by other countries, which generates a significant amount of power generation from the Drax Power Station and Lynemouth Power Station, both fuelled by biomass (wood pellets), as well as wind, solar and nuclear energy.
Strauss added that the impact of climate change is affecting the insurance industry and that he is optimistic that this will help push policy goals forward related to the adoption of more alternative energy sources, reducing the use of fossil fuels.
“This means the cost of doing business is going up. And even the most conservative businesspeople who think climate change is a hoax, they’ll get the message when their pocketbook is being invaded by climate change issues, and I think this is going to cause change,” he said.
Trends, trade and policy
Hawkins Wright’s Fiona Matthews discussed global demand trends, trade flows and policy environments during the panel session.
After challenging years in 2022 and 2023, the wood pellet sector rebounded in 2024 with the market experiencing a nine per cent year-on-year increase reaching 49 million tonnes. This was despite a slowdown in the Asian market.
“The key factor driving that annual growth in 2024 was a return to normal historic levels of generation from converted power stations in the U.K., and we saw actually a huge jump of 3 million tonnes additional demand emerge in the U.K. last year,” she said. “We expect to see a similar increase this year, with the U.K. likely to return to its previous peak around 9 million tonnes in 2025.”
Matthews then offered the crowd a look at trade flows presenting some key data on major wood pellet importers and exporters, shown as a 12-month moving total. Using the latest available data that was available up to June 2025, she discussed the trends taking place so far this year. The U.K. market was up 18 per cent from the previous 12-month period, while the Japanese market was up 29 per cent year over year, due to new feed-in-tariff supported power plants coming online. However, there was a 10-per-cent reduction in wood pellet imports into the Netherlands over the previous 12-month period.
In terms of major supply regions, Matthews said there has been huge growth in Vietnamese exports.
“Vietnamese pellet producers are very successfully building out their capacity, increasing their production rates to serve the demand in Japan and Korea,” she said.
The U.S. wood pellet market experienced an increase in exports of two per cent, year over year, while Canada also experienced an increase in exports of five per cent over the past 12-month period, overcoming some feedstock availability challenges that had previously supressed outputs.
However, there is some uncertainty facing the wood pellet market. Looking forward, Matthews stated that her company is forecasting a reduction of over 4 to 5 million tonnes of wood pellet demand in the European market, largely fuelled by changing energy policies in the U.K. and the Netherlands.
Matthews also discussed the potential impact of the EU’s Renewable Energy Directive, also known as RED III.
“Some of the key requirements of RED III are The Cascading Principle, which now has been implemented at member state level, and also a ban on the use of industrial grade roundwood. But both of these aspects are being implemented with some variations across different member states, and the consequences of this is that there will be variations in different end user requirements across the European market, depending on how those individual member states implement those rules,” Matthews explains. “There could be a consequence in terms of feedstock sourcing for pellet producers selling into these different countries and countries.”’
Matthews also touched on the impact of the delayed implementation of the EUDR. She said that her company has seen some signs of the expected deadline driving some increased stock levels in the European market.
“Actors were definitely taking this seriously and there’s been a lot of investment through the supply chain, managing the data collection and due diligence requirements,” she said.
Spot prices and freight rates
Marta Imarisio, senior reporter at Argus Biomass, presented on the wood pellet market with a focus on the upcoming heating season. Imarisio said that spot prices had been rising so far this year, ahead of the 2025-26 heating season until the end of August, but that things have changed slightly in September.
During the 2024-25 heating season, some end users were stocking up ahead of the EUDR implementation, which ended up being delayed by one year, and now, by an additional year. The market was also supported by strong biomass use across northwestern Europe this past winter. So far this year, Argus has not seen the same wood pellet stockpiling taking place by end users in the bioheat space.
Freight rates have been creeping up in the past two quarters of 2025. Imarisio stated that the increasing rates are being driven up by U.S. fees on Chinese-owned vessels, which will take effect on October 14, 2025.
Chinese vessels are starting to move towards the Pacific Ocean to avoid incurring the charges, while non-Chinese-owned vessels are remaining in the Atlantic Ocean due to strong demand, Imarisio explained.
“We’ve been seeing, since Q2, high demand for vessels with charter rates creeping up compared to earlier in the year, and that is still the case. These price increases are applying mostly to larger size vessels, so supermaxes and ultramaxes, which are the larger sizes that are usually used for wood pellets,” she said.
This article was originally published in Canadian Biomass Magazine.